The essence of investing in the WLFI token is a bet on Trump's election and a form of political donation.

Author: Web3Mario

Abstract: First of all, I wish everyone a happy Mid-Autumn Festival. During the holiday, I discovered an interesting topic and researched the World Liberty Financial, which has been highly popular in the past few days. This DeFi project, deeply involved by members of the Trump family, made more detailed commitments in the Twitter space on September 17, including the distribution of WLFI tokens, the project's vision, and more. Trump also spent a long time in the meeting talking optimistically about the cryptocurrency field. So, for such a seemingly not so "Web3 style" project, how should we grasp its value? On this point, the author has done some research and shared some insights with you. In general, I believe that the core value of World Liberty Financial lies in finding new fundraising channels to alleviate the disadvantage of fundraising for Trump's 2024 campaign. Therefore, the essence of investing in WLFI tokens is a bet on Trump's election and a form of political donation.

Negative image of the co-founders and the lack of a specific roadmap make World Liberty Financial quite controversial

Many articles have introduced the background of this project, and here is a brief review. In fact, since its announcement, the project has been quite controversial, with the focus of controversy focusing on three aspects:

Negative co-founder background: Considering the deep involvement of two members of the Trump family, Eric Trump and Donald Trump Jr., in the project, who do not have much experience in the cryptocurrency industry, the industry background of these two sons of Trump is still related to real estate. Therefore, it is generally believed that the actual operators of the project are their two co-founders, Zachary Folkman and Chase Herro. Trump stated in the live broadcast that Herro and Folkman were introduced to Trump's sons by real estate investor Steve Witkoff. Prior to this, these two had already collaborated on a DeFi lending project called Dough Finance, which was founded in April 2024 and was hit by a flash loan attack on July 12, resulting in a loss of over $1.8 million, after which the project entered a stagnant state. In addition, the resumes of the two are not the elite route of most technology or financial industry entrepreneurs. Folkman's previous influential project was called "Data Hotter Girls," which was a dating teaching seminar, and Herro has a criminal record.

Unclear product roadmap: Although the Trump family has been promoting the project vigorously with vague descriptions in the past month and promising to do many things at the same time, in fact, the project has not publicly disclosed some more detailed and accurate plans or descriptions. In this Twitter space, Folkman seemed to give some descriptions, and the project is not trying to create entirely new financial tools but aims to improve the usability of DeFi. During the discussion, Donald Trump Jr. talked about his family's experience of "debanking," which refers to the difficulties some individuals or companies encounter in obtaining credit lines from traditional financial institutions. So it is not difficult to see that the initial focus of the project should still be on the lending scene. However, such information seems insufficient to convince most people and acknowledge its vision and business logic.

Centralization issue of WLFI token economics: In this interview, Folkman also provided a detailed distribution plan for the WLFI token, with 20% of the project tokens allocated to the founding team, including the Trump family, 17% of the tokens used for user rewards, and the remaining 63% of the tokens available for public purchase. However, such a distribution ratio seems to be quite different from traditional Web3 projects. The tokens are basically concentrated in the hands of the team and whales, and there is not even a distribution for community incentives.

So why would a project that doesn't seem very attractive receive strong support from the Trump family, especially at this sensitive time near the election? I believe the core reason is to find new fundraising channels to alleviate the disadvantage of fundraising for Trump's 2024 campaign. Therefore, the essence of investing in WLFI tokens is a bet on Trump's election and a form of political donation.

Trump's current campaign funding has a significant disadvantage and hopes to find more flexible fundraising channels

We know that the federal government of the United States is composed of three parts: the legislative, judicial, and executive branches. The executive branch obtains positions through appointment, recruitment, or examination. The legislative branch, specifically the Congress, is composed of the Senate and the House of Representatives, and the members of the Senate and the House of Representatives are elected. The judicial branch is between the two, with different states having different regulations, and during his presidency, Trump appointed over 200 federal judges, greatly changing the ideological composition of the federal judiciary. This is also the reason why he was able to maintain countermeasures in the face of legal litigation crises in the first half of the year.

Elections are essentially a political show, and this process requires a large amount of funding for publicity to gain more support from voters, covering all aspects online and offline. Considering that the entire publicity has actually started nearly a year before the election, the long cycle requires a far greater amount of capital compared to events such as movie or concert releases. The pace of publicity is affected by some unexpected events, but it is likely to continue to increase to allocate the budget, and the closer to the election, the faster the expenditure.

Due to having legislative power, interest groups are formed between the government and business during this process. Some large-scale entrepreneurs choose to support some politicians in exchange for the promotion of certain bills that are in line with their interests after the politician's successful election. This donation is the so-called political donation. In order to prevent excessive rent-seeking and the worst forms of corruption, U.S. laws have designed some acts to standardize the entire process, among which the "527 organization" is a tax-exempt organization designed for candidates to raise funds to support elections, and there are many specific types, with different designs for the scale of capital received and the methods of use.

In general, a politician's performance in some key events or unexpected events significantly affects the amount of funding raised, as the support from donors to politicians is also phased. For example, a bad debate or a sudden scandal will affect the confidence of donors in the entire future election situation, leading to a halt in donations. Therefore, the fundraising situation can accurately reflect the performance of the candidates.

After introducing this background knowledge, let's take a look at the gap in fundraising between Trump's 2024 campaign team and the current Harris 2024 campaign team. This gap mainly manifests in two aspects: the scale of funds and the efficiency of allocation.

First, in terms of the scale of funds, the Democratic Party has always been ahead of the Republican Party in fundraising, and this situation has intensified since Harris was confirmed, indicating that the support forces within the Democratic Party have integrated and begun to support this relatively inexperienced candidate. As of now, Harris's team has raised a total of $770 million and spent $440 million, while Trump's team has raised $570 million and spent $310 million. Regardless of the remaining funds and the funds already invested, Trump's team undoubtedly has a significant disadvantage. This is also why, after facing an assassination attempt, Trump's momentum has been declining, except for successfully forcing the Democratic Party to replace Biden. After the first presidential debate last week, in terms of debate skills, Harris undoubtedly performed better, allowing her to raise $50 million within 24 hours after the debate, demonstrating her strong fundraising ability.

Of course, it is also interesting to look at the differences in supporters between the two. Following Biden's attraction of support from billionaires such as Michael Bloomberg and LinkedIn co-founder Reid Hoffman, Harris herself has also received support from several billionaires, including Hoffman, Netflix co-founder Reed Hastings, former Meta COO Sheryl Sandberg, and philanthropist Melinda French Gates (wife of Bill Gates). On July 31, over 100 venture capitalists signed a letter supporting Harris's candidacy and pledged to vote for her, including entrepreneur Mark Cuban, investor Vinod Khosla, and Lowercase Capital founder Chris Sacca, among other billionaires. Trump's core supporters include banker Timothy Mellon, wrestling tycoon Linda McMahon (wife of Vince McMahon), energy executive Kelcy Warren, ABC Supply founder Diane Hendricks, oil tycoon Timothy Dunn, and prominent conservative donors Richard and Elizabeth Uihlein, as well as Tesla founder Elon Musk. However, from this list, it can be seen that Harris's supporters are more from the emerging technology industry, while Trump's supporters focus on traditional industries. In terms of online promotion, Harris undoubtedly has a stronger advantage, especially since Musk acquired Twitter. This has helped Trump alleviate this disadvantage, so you will find that after Trump returned to Twitter, his online marketing efforts undoubtedly revolved around that platform.

Looking at the specific funding channels, Harris's external fundraising channels are mainly through the Carey Committee, while Trump primarily uses SuperPAC. Both of these organizations belong to the 527 organization just introduced, which has the advantage of unlimited funding donations. However, in terms of fund expenditure, the former has greater flexibility. The Carey Committee has two separate accounts: one account is used for traditional restricted donations (which can be donated directly to candidates and parties), and the other account is used for unrestricted independent expenditures (used for advertising, publicity, etc.). Super PACs, on the other hand, cannot directly coordinate with a candidate's campaign team or party, nor can they donate directly to a candidate. This means that Trump's team is also far weaker than Harris's team in terms of fund utilization efficiency.

This breaks the traditional impression that Trump, as a wealthy businessman, should have an advantage in funding. However, the situation is quite the opposite, with Harris's team currently having a clear funding advantage, and this advantage is further expanding. Therefore, at this time, it is easy to understand why such an immature cryptocurrency project is being launched, as it also indicates the hope of finding more flexible fundraising channels through the cryptocurrency field. This can also be seen as a practical gesture to please the previous cryptocurrency enthusiast voters to some extent. Therefore, taking some risks for this is worthwhile. Of course, this also explains why the project, without a detailed roadmap, is based on the explanation that WLFI will follow Regulation D for fundraising, which is a guarantee that the risk is kept within an acceptable range. This is the key issue.

For the Trump team, there are many ways to benefit from this project, apart from direct ICO sales. There is also an interesting project, which is to cash out using a lending platform. Do you remember the issue mentioned earlier by Donald Trump Jr. about his family experiencing "debanking"? Assuming that World Liberty Financial successfully launches as a lending protocol and attracts a certain amount of funds, the team will be able to use a large amount of WLFI tokens they control as collateral to lend out real money on the platform without significantly affecting the secondary market price, similar to what the founder of Curve did. This can indeed help alleviate the problem they are facing.

Considering these factors, I have no doubts about the launch of this project, because the essence of investing in WLFI tokens is a bet on Trump's election and a form of political donation. This approach will be favored by many cryptocurrency industry tycoons. The future growth of the project depends on the outcome of this game. If Trump is successfully elected, such a resource-driven project will easily find a specific business direction. However, if he fails, undoubtedly, in an environment exhausted by various litigations, the Trump family should also have no time to deal with this. In this complex situation, as small investors, we still need to be cautious and participate carefully.

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